CAC Payback Period
Also: Payback PeriodMonths to Recover CAC
How long it takes for a customer's gross-margin revenue to repay the cost of acquiring them.
Why it matters
Payback measures how fast you get your acquisition money back, which drives cash flow and how quickly you can reinvest in growth. A short payback means acquisition self-funds quickly, a long one ties up cash and raises risk. It complements LTV:CAC by adding the dimension of time.
How it is calculated
CAC Payback (months) = CAC / (average monthly revenue per customer x gross margin)
What good looks like
Many SaaS businesses target payback under 12 months, with under 18 often acceptable for larger contracts. The longer the payback, the more cash you must front and the more a churn surprise hurts.
Related terms
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